EXHIBIT NO. EX-99.d.5
GAM FUNDS, INC.
October 23 , 2001
Global Asset Management (USA) Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Amended and Restated Investment Advisory Agreement
Dear Sirs:
The undersigned, GAM Funds, Inc., a Maryland corporation (the "Fund"), is
an open-end diversified series investment company, registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). This letter (the
"Agreement") amends the Investment Advisory Agreement dated April 25, 2001 and
confirms your engagement as investment adviser to the GAM American Focus Fund
(formerly known as GAM North America Fund) series of the Fund's shares ("GAM
American Focus Fund") and to the GAM American Focus Long/Short Fund series of
the Fund's shares ("GAM American Focus Long/Short Fund") on the terms and
subject to the conditions set forth below:
SECTION 1. Investment Management Services
A. General
You shall (i) conduct and maintain a continuous review of GAM American
Focus Fund's and GAM American Focus Long/Short Fund's portfolios of securities
and investments; and (ii) make all decisions regarding purchases and sales of
securities and other investments on behalf of GAM American Focus Fund and GAM
American Focus Long/Short Fund (the "Advisory Services").
In performing the Advisory Services, you shall be guided by the investment
objectives, policies and restrictions of GAM American Focus Fund and GAM
American Focus Long/Short Fund as set forth in the Prospectus and the Statement
of Additional Information filed by the Fund with the Securities and Exchange
Commission, as amended from time to time (the "Disclosure Documents"), and in
accordance with such other policies or limitations adopted by the Board of
Directors of the Fund and the provisions of the 1940 Act and the rules
promulgated thereunder. We agree to supply you with all such relevant documents
and to notify you of any relevant changes in the investment objectives, policies
and restrictions of GAM American Focus Fund and GAM American Focus Long/Short
Fund.
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In acting under this Agreement, you shall be an independent contractor and
shall not be an agent of the Fund.
B. Selection and Recommendations of Brokers
You shall be responsible for the selection of members of securities
exchanges, brokers and dealers for the execution of the portfolio transactions
of GAM American Focus Fund and GAM American Focus Long/Short Fund, and, when
applicable, negotiating commissions in connection therewith. All such selections
shall be made in accordance with the Fund's policies and restrictions regarding
brokerage allocation set forth in the Disclosure Documents.
You may, in making such brokerage selections and in negotiating
commissions, take into account any services or facilities provided by a broker.
You are authorized to select or recommend a member of a securities exchange or
any other securities broker or dealer which charges an amount of commission for
effecting a securities transaction in excess of the amount of commission another
member of an exchange, broker or dealer would have charged for effecting that
transaction if you determine in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services (as
such services are defined in Section 28(e) of the Securities Exchange Act of
1934, as amended (the "1934 Act")) provided by such member, broker or dealer,
viewed in terms of either that particular transaction or your overall
responsibility with respect to the accounts as to which you exercise investment
discretion (as that term is defined in Section 3(a)(35) of the 1934 Act).
C. Reports and Summaries
You shall maintain a continuous record of all the investments and
securities which comprise the portfolios of GAM American Focus Fund and GAM
American Focus Long/Short Fund, and shall furnish to the Fund or its designee
such summaries of the portfolios of GAM American Focus Fund and GAM American
Focus Long/Short Fund and such other reports, evaluations, analyses and
opinions, including statistical reports, relating to your services as investment
adviser hereunder as the Fund may reasonably request at any time or from time to
time or as you may deem helpful to the Fund. All such records shall be the
property of the Fund.
SECTION 2. Expenses
You shall assume and pay all of your own costs and expenses, including
those for furnishing such office space, office equipment, office personnel and
office services as you may require in the performance of your duties under this
Agreement.
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The Fund shall bear all expenses of the organization, operations and
business of GAM American Focus Fund and GAM American Focus Long/Short Fund not
expressly assumed or agreed to be paid by you under this Agreement. In
particular, but without limiting the generality of the foregoing, the Fund shall
pay all interest, taxes, governmental charges or duties, fees, brokerage and
commissions of every kind arising hereunder or in connection herewith, expenses
of issue, repurchase or redemption of GAM American Focus Fund and GAM American
Focus Long/Short Fund shares, expenses of registering, qualifying and pricing
the GAM American Focus Fund and GAM American Focus Long/Short Fund shares for
sale, insurance, association membership dues, all charges of custodians
(including fees as custodian and for keeping books, performing portfolio
valuations and rendering other services to the Fund), transfer agents,
registrars, dividend disbursing agents, independent auditors and legal counsel,
expenses of preparing, printing and distributing all prospectuses, proxy
material, reports and notices to stockholders, all distribution expenses under
the plans adopted in accordance with Rule 12b-1 under the 1940 Act, fees and
out-of-pocket expenses of directors, all overhead expenses of GAM American Focus
Fund's and GAM American Focus Long/Short Fund's operations, including office
space, office equipment, office personnel and office services and all other
costs incident to the corporate existence of GAM American Focus Fund and GAM
American Focus Long/Short Fund.
SECTION 3. Use of Services of Others
You may (at your expense except as set forth in Section 2 hereof) employ,
retain or otherwise avail yourself of the services or facilities of other
persons or organizations for the purpose of providing you, GAM American Focus
Fund or GAM American Focus Long/Short Fund with such statistical or factual
information, such advice regarding economic factors and trends or such other
information, advice or assistance as you may deem necessary, appropriate or
convenient for the discharge of your obligations hereunder or otherwise helpful
to GAM American Focus Fund or GAM American Focus Long/Short Fund.
SECTION 4. Management Fees
A. GAM American Focus Fund
In consideration of your services hereunder to GAM American Focus Fund, you
shall be entitled to a management fee, payable quarterly, equal to 0.25% of the
average daily net assets of GAM American Focus Fund during the quarter preceding
each payment (equivalent to an annual fee of 1.0% of the average daily net
assets of GAM American Focus Fund during the year). The fee shall be accrued for
each calendar day and the sum of the daily fee accruals shall be paid quarterly
to you on the first business day of the next succeeding quarter. The daily fee
accruals will be computed by multiplying the fraction of one over the number of
calendar days in the quarter by 0.25% and multiplying this product by the net
assets of GAM American Focus Fund as determined in accordance with the Fund's
Prospectus as of the close of business on the previous business day on which the
Fund was open for business.
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B. GAM American Focus Long/Short Fund
In consideration of your services hereunder to GAM American Focus
Long/Short Fund, you shall be entitled to a management fee comprised of two
components:
(a) The first component is a monthly base fee ("Base Fee") equal to
one-twelfth of 1.50% of the average daily net assets of GAM American Focus
Long/Short Fund during the month.
(b) The second component is a performance adjustment ("Performance
Adjustment") that either increases or decreases the Base Fee, depending on
how GAM American Focus Long/Short Fund (the "Portfolio") has performed
relative to the Standard & Poor's Composite Stock Price 500 Index (the
"Index"). The maximum performance adjustment upward or downward is 0.5%
annually.
No Performance Adjustment shall be due if the performance of the Portfolio
during the performance period is less than or equal to 2.0% better or 2.0%
worse than the performance of the Index during the performance period. (For
example, if the performance of the Index is +5.0% and the performance of
the Portfolio is between +3.0% and +7.0%, then there shall be no
Performance Adjustment.) During the first twelve months of operations of
GAM American Focus Long/Short Fund, the management fee will equal the Base
Fee with no Performance Adjustment.
The Performance Adjustment is 0.125% for each percentage point (the
performance of the Portfolio and the Index each being calculated to the
nearest 0.01%) that the Portfolio's investment performance for the
performance period was more than 2.0% better or worse than the record of
the Index as then constituted. The maximum Performance Adjustment is 0.50%.
(For example, if the performance of the Index is +5.0% and the performance
of the Portfolio is +9.0%, then the Performance Adjustment is +0.25%; and
the sum of the Base Fee and the Performance Adjustment is 1.75%.)
The performance period will commence with the first day of the first full
month following the Portfolio's commencement of operations. During the
first eleven months of the performance period for the Portfolio, there will
be no Performance Adjustment. Starting with the twelfth month of the
performance period, the Performance Adjustment will take effect. Each
subsequent performance period will consist of the current month plus the
previous eleven months.
The Portfolio's investment performance for the performance period shall be
the cumulative monthly asset-weighted investment performance of all classes
of shares of the Portfolio over the performance period. The asset-weighted
investment performance for the Portfolio for a given month will be
calculated by multiplying the investment performance of each class for the
month by its average net assets (determined as of the close of business on
each business day of the month), adding the results together and dividing
the sum by the aggregate net assets of all classes of the Portfolio for
that month. Any class that does not complete a full month of operations in
a given month will be excluded from the calculation of the Portfolio's
investment performance for that month, and its assets will be excluded from
the aggregate net assets of the Portfolio in determining the Portfolio's
investment performance for that month.
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In computing the investment performance of the Portfolio and the investment
record of the Index, distributions of realized capital gains, the value of
capital gains taxes per share paid or payable on undistributed realized
long-term capital gains accumulated to the end of such period and dividends
paid out of investment income on the part of the Portfolio, and all cash
distributions of the securities included in the Index, will be treated as
reinvested in accordance with Rule 205-1 or any other applicable rules
under the Investment Advisers Act of 1940, as the same from time to time
may be amended.
One twelfth of the annual Performance Adjustment will be applied to the
average of the net assets of the Portfolio determined as of the close of
business on each business day throughout the month and the performance
period.
(c) In case of termination of this Agreement during any month, the fee for
that month shall be reduced proportionately on the basis of the number of
business days during which it is in effect for that month. The Base Fee
will be computed on the basis of and applied to net assets averaged over
that month ending on the last business day on which this Agreement is in
effect. The amount of the Performance Adjustment will be computed on the
basis of and applied to net assets averaged over the 12-month period ending
on the last business day on which this Agreement is in effect provided that
if this Agreement has been in effect less than 12 months, the computation
will be made on the basis of the period of time during which it has been in
effect.
SECTION 5. Limitation of Liability of Investment Adviser
You shall be liable for losses resulting from your own acts or omissions
caused by your willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder or your reckless disregard of your duties
under this Agreement, and nothing herein shall protect you against any such
liability to GAM American Focus Fund, GAM American Focus Long/Short Fund, the
Fund or its stockholders. You shall not be liable to GAM American Focus Fund,
GAM American Focus Long/Short Fund, the Fund or to any stockholder thereof for
any claim or loss arising out of any investment or other act or omission, in the
performance of your duties under this Agreement or for any loss or damage
resulting from the imposition by any government of exchange control restrictions
which might affect the liquidity of the assets of GAM American Focus Fund or GAM
American Focus Long/Short Fund maintained with custodians or securities
depositories in foreign countries or from any political acts of any foreign
governments to which such assets might be exposed.
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SECTION 6. Services to Other Clients and the Fund
Nothing contained in this Agreement shall be deemed to prohibit you or any
of your affiliated persons from acting, and being separately compensated for
acting, in one or more capacities on behalf of the Fund. We understand that you
may act as investment manager or in other capacities on behalf of other
investment companies and clients. While information and recommendations you
supply to GAM American Focus Fund and GAM American Focus Long/Short Fund, and
investments you make on behalf of GAM American Focus Fund and GAM American Focus
Long/Short Fund shall in your judgment be appropriate under the circumstances in
light of the investment objectives and policies of GAM American Focus Fund and
GAM American Focus Long/Short Fund, respectively, it is understood and agreed
that they may be different from the information and recommendations you or your
affiliated persons supply to other clients. You and your affiliated persons
shall supply information, recommendations and any other services, and shall
allocate investment opportunities among GAM American Focus Fund, GAM American
Focus Long/Short Fund and any other client in an impartial and fair manner in
order to seek good results for all clients involved, but you shall not be
required to give preferential treatment to any one client, including GAM
American Focus Fund or GAM American Focus Long/Short Fund, as compared with the
treatment given to any other client. Whenever you shall act in multiple
capacities on behalf of the Fund, you shall maintain the appropriate separate
accounts and records for each such capacity. As used herein, the term
"affiliated person" shall have the meaning assigned to it in the 1940 Act.
On occasions when you deem the purchase or sale of a security to be in the
best interest of GAM American Focus Fund, GAM American Focus Long/Short Fund,
one or more of the other series of the Fund and/or other clients, you may, to
the extent permitted by applicable law, aggregate the securities to be so sold
or purchased in order to obtain the best execution or lower brokerage
commissions, if any. You may also on occasion purchase or sell a particular
security for one or more customers in different amounts. On either occasion, and
to the extent permitted by applicable law and regulations, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by you in the manner you consider to be the most
equitable and consistent with your fiduciary obligations to GAM American Focus
Fund, GAM American Focus Long/Short Fund and to such other clients.
SECTION 7. Reports and Information
The Fund shall furnish to you solely for your use such prospectuses, proxy
statements, reports and other information relating to the business and affairs
of the Fund as you may, at any time or from time to time, reasonably require in
order to discharge your duties under this Agreement.
SECTION 8. Term of Agreement
This Agreement shall be effective on the date on which this Agreement is
approved by vote of a majority of the outstanding shares of GAM American Focus
Fund and GAM American Focus Long/Short Fund (as defined in the 1940 Act), and
shall continue in effect for consecutive terms of one year each ending on each
anniversary of such effective date, subject to approval annually with respect to
each series by the Board of Directors of the Fund or by vote of a majority of
the outstanding shares of such series and also, in either event, by the vote,
cast in person at a meeting called for the purpose of voting on such approval,
of a majority of the directors of the Fund who are not parties to this Agreement
or interested persons (as defined in the 1940 Act) of any such person.
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SECTION 9. Termination of Agreement; Assignment
This Agreement may be terminated with respect to any series by either party
hereto, without the payment of any penalty, upon 60 days' prior notice in
writing to the other party; provided that, in the case of termination by the
Fund, such action shall have been authorized by resolution of a majority of the
directors of the Fund in office at the time or by vote of a majority of the
outstanding shares of the relevant series.
This Agreement shall automatically terminate in the event of its assignment
(as defined in the 1940 Act).
Termination of this Agreement for any reason shall not affect rights of the
parties that have accrued prior to such termination.
SECTION 10. Applicable Provisions of Law
This Agreement shall be subject to all applicable provisions of law,
including, without limitation, the applicable provisions of the 1940 Act, and to
the extent that any provisions herein contained conflict with any such
applicable provisions of law, the latter shall control.
If the above terms and conditions are acceptable to you, please so indicate
by signing and returning to us the enclosed copy of this letter, whereupon this
letter shall constitute a binding contract between us.
Very truly yours,
GAM FUNDS, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxx
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Authorized Signature
Accepted and Agreed:
GLOBAL ASSET MANAGEMENT (USA) INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------
Authorized Signature
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